Shopify Competitor Analysis - The Strategy Story

Before we get into the specifics of Shopify, let’s understand competitor analysis. Competitor analysis is a strategic research method companies use to identify, evaluate, and understand their current and potential competitors within the market. It’s an essential business strategy component and instrumental in understanding the industry landscape.

The process usually involves the following steps:

Identifying Key Competitors: The first step is to identify who your competitors are. These may be direct competitors (those who offer the same or similar products or services as you) or indirect competitors (those who provide different products or services but compete for the same consumer dollar).
Analyzing Competitors’ Strategies and Objectives: Once competitors are identified, the next step is to understand their business strategies and objectives. This may involve analyzing their marketing materials, financial performance, customer reviews, or any public information available about the company.
Assessing Competitors’ Strengths and Weaknesses: This step involves evaluating the identified competitors’ strengths and weaknesses. Strengths include unique products or services, strong brand recognition, and superior customer service. Weaknesses include poor product quality, weak customer service, or high prices.
Understanding Competitors’ Products/Services: Understanding what your competitors offer and how your products or services compare is important. This could involve looking at features, quality, pricing, customer service, and marketing strategies.
Observing Competitors’ Reaction Patterns: Some companies react more aggressively than others when faced with competition. Understanding these patterns lets you predict how these companies might respond to your business strategies.
Drawing Conclusions and Formulating Strategy: The final step is to take all the information gathered from the analysis, draw meaningful conclusions, and use those to formulate or adjust your business strategies.

The main goal of a competitor analysis is to understand the competitive landscape, spot opportunities, and threats, and position your company most advantageously. It helps to inform strategic decisions, from product development to marketing and sales efforts. Now let’s do a competitor analysis of Shopify.

Here is the competitor analysis of Shopify

Amazon

While Shopify and Amazon may appear to serve different functions, they are competitors in eCommerce. Here’s how they compete:

Sales Platform: Both Shopify and Amazon provide platforms for businesses and individuals to sell products. Amazon is a marketplace where businesses sell their products directly on Amazon’s platform. On the other hand, Shopify provides a platform for businesses to create standalone online stores.
Control and Branding: One of the main differences between Shopify and Amazon is the level of control and branding provided to sellers. Shopify allows for complete customization of an online store, enabling businesses to create unique, branded shopping experiences. On the other hand, Amazon provides a uniform platform with limited customization, making it difficult for companies to distinguish themselves from their competitors.
Customer Relationship: With Shopify, merchants have direct relationships with their customers, which can benefit customer service, repeat business, and marketing purposes. In contrast, customer relationships on Amazon are primarily owned by Amazon, not the individual seller. Amazon does not provide sellers with customer email addresses and prohibits direct communication outside their platform.
Fulfillment Services: Both Shopify and Amazon offer fulfillment services. Amazon’s service, Fulfillment By Amazon (FBA), is well-established and popular among sellers. Shopify also launched its fulfillment network, challenging Amazon’s dominance.
Sales Channels: Both companies are expanding their services to include more sales channels. Shopify integrates with multiple sales channels, including social media platforms and marketplaces like Amazon, eBay, etc. Amazon has also diversified, allowing streaming, advertising, and a host of other services.
Fees: Shopify charges a monthly subscription fee plus fees for payment processing and optional apps. Amazon charges various fees, including listing, selling, storage, and fulfillment fees for FBA. One platform may be more cost-effective, depending on the business model and sales volume.

WooCommerce

Ease of Use: Shopify is known for being user-friendly, with an intuitive interface that makes it easy to set up an online store, even for non-technical users. WooCommerce, on the other hand, is a plugin for WordPress and requires a bit more technical know-how to set up and manage.
Customization: WooCommerce offers more flexibility in terms of customization due to its open-source nature. If you’re comfortable with coding, you can tweak nearly every aspect of your WooCommerce store. Shopify also offers customization, but it’s more limited compared to WooCommerce, especially if you’re on a basic plan.
Cost: WooCommerce is a free plugin, but running a WooCommerce store incurs other costs, such as hosting, security, domain, and potentially premium plugins. Shopify has a range of subscription plans, with the basic one starting at $29 per month (as of 2021), and includes hosting and security. Additional costs on Shopify can come from premium themes and third-party apps.
Hosting: Shopify is a hosted solution, meaning that hosting is included in your plan, and Shopify takes care of maintenance and security for you. With WooCommerce, you need to arrange your hosting and take care of your website maintenance and security, which adds a layer of complexity but also gives you more control.
Payments and Fees: Shopify has its payment gateway, Shopify Payments, and also supports a variety of third-party payment gateways. However, transaction fees apply if you use a third-party payment gateway. WooCommerce, on the other hand, supports many payment gateways and doesn’t charge transaction fees.
Support: Shopify offers 24/7 customer support, which can be a lifesaver if you encounter issues with your store. Support for WooCommerce primarily comes from community forums, documentation, and resources, although premium support can be accessed if you purchase certain WooCommerce products or services.
Scalability: Both platforms are scalable, but Shopify might provide an easier path to scaling due to its hosted nature. As your business grows on WooCommerce, you might need to manage more complex hosting needs.

Magento

Ease of Use: Shopify is known for its user-friendly, intuitive interface, designed to allow anyone to set up an online store quickly and easily, even without technical knowledge. In contrast, Magento is more complex and is typically used by larger businesses with access to development resources.
Customization: Both platforms offer high levels of customization, but the approach is different. Shopify’s customization is straightforward and more accessible to beginners, mainly through their theme editor and apps. Magento is an open-source platform that allows for deeper customization but requires more technical expertise.
Cost: Shopify operates on a monthly subscription model with several tiered plans. The cost includes hosting, access to the platform, and customer support. On the other hand, Magento Open Source is free to download and use, but you’ll need to pay for your hosting, security, and potentially professional development services. Magento Commerce, the enterprise version, requires an expensive license, making it more suitable for large businesses.
Hosting: Shopify is a hosted solution, which means hosting is included in your plan. This makes it easier to get started and maintain your site. However, Magento requires you to secure and set up your hosting, which offers more control and responsibility.
Performance and Scalability: Both platforms can support large, high-volume online stores and offer good site speed and performance. However, with Magento, performance and scalability depend on your hosting solution and how well the site is developed and maintained.
Support: Shopify offers 24/7 support to all of its users. On the other hand, Magento Open Source relies on community support through forums and documentation, while Magento Commerce includes technical support.
Integrations and Extensions: Both Shopify and Magento offer a large number of apps and extensions to add functionality to your store. Shopify’s App Store is extensive and user-friendly, while Magento’s Marketplace also offers a wide range of extensions, although installation requires technical skills.

BigCommerce

Shopify and BigCommerce are direct competitors in the eCommerce platform industry and share several similarities. However, some key differences distinguish them. Here’s a comparison:

Ease of Use: Both platforms offer a user-friendly experience, with intuitive interfaces that make setting up an online store relatively easy, even for beginners. Some users might find one interface more appealing, but this is largely subjective.
Features: Both platforms offer a wide range of features that can meet the needs of most online stores. BigCommerce has some advanced features built-in, such as customer groups and segmentation, that Shopify only offers through third-party apps or higher-tier plans. However, Shopify’s app marketplace is generally larger and more diverse.
Themes and Design: Both platforms offer a variety of themes (free and paid) that are responsive and customizable. Some users prefer the aesthetics of Shopify’s themes, but this is subjective.
Pricing: Both platforms have similar pricing structures, offering several tiered plans that cater to different business sizes and needs. As of 2021, Shopify’s plans started at $29/month, while BigCommerce’s started at $29.95/month. The cost can increase on both platforms when you add premium themes or apps.
Scalability: Both platforms are designed to scale your business and handle everything from small to large enterprises.
Multi-channel Selling: Shopify and BigCommerce allow you to sell across multiple channels, including social media and marketplaces like Amazon and eBay.
SEO: Both platforms offer solid SEO tools to help your store rank well in search engines. Some users have noted that BigCommerce provides a few more advanced SEO settings out of the box.
Support: Both Shopify and BigCommerce offer 24/7 support via phone, live chat, and email, along with self-help resources.

Squarespace

Shopify and Squarespace are popular platforms for building websites, but they have different primary focuses and strengths, making them competitors in the eCommerce space. Here’s how they compare:

Primary Focus: Shopify is primarily an eCommerce platform that’s designed to help businesses of all sizes sell products online. It offers powerful eCommerce features out of the box. On the other hand, Squarespace is primarily a website builder that’s popular for its beautiful design templates. It also offers eCommerce functionality but is generally more straightforward and less feature-rich than Shopify.
Ease of Use: Both platforms are user-friendly and do not require users to have any coding skills. However, because of its focus on eCommerce, Shopify may have a steeper learning curve if you’re new to selling online.
Design and Customization: Squarespace is renowned for its sleek, professionally designed templates. Shopify’s themes are visually appealing, but many users find Squarespace’s design options superior. Both platforms offer a reasonable degree of flexibility in terms of customization, but Shopify’s extensive app marketplace can give it an edge in adding additional functionality.
eCommerce Features: Shopify is more powerful when it comes to eCommerce features. It’s designed to handle everything from inventory management to shipping and tax calculation, and it offers a range of payment gateways. Squarespace’s eCommerce functionality is more basic, although it should be sufficient for small to medium-sized businesses with straightforward needs.
Pricing: As of 2021, both platforms offered several pricing tiers. Shopify’s plans start at $29/month, while Squarespace’s eCommerce plans start at $26/month (if paid annually). The right choice depends on your specific needs and budget.
SEO and Marketing Tools: Both platforms offer solid SEO tools to help your store rank in search engines. Shopify has a slight edge in marketing tools, largely thanks to its extensive app marketplace.
Support: Both Shopify and Squarespace offer 24/7 customer support.

Wix

Shopify and Wix are platforms allowing users to create websites and online stores, but they target slightly different needs and markets. Here’s how they compete:

Focus: Shopify focuses mainly on eCommerce, and it’s designed to provide everything a business needs to start, run, and grow an online store. On the other hand, Wix is primarily a general website builder offering eCommerce functionality. While you can build an online store with Wix, its eCommerce features are less robust than Shopify’s.
Ease of Use: Both platforms are known for their user-friendliness, and neither requires coding skills to create a website. Wix’s drag-and-drop website builder is particularly easy to use for complete beginners. Shopify also has an intuitive interface, but because it’s a more specialized eCommerce platform, there might be a slightly steeper learning curve.
Design and Customization: Wix offers a wide range of customizable templates, and its drag-and-drop interface allows for a lot of flexibility in design. Shopify’s themes are also customizable, though not to the same extent as Wix’s in terms of design. However, Shopify’s customization capabilities are more focused on eCommerce functionality.
eCommerce Features: Shopify excels when it comes to eCommerce features. It offers advanced product listings, inventory management, shipping, taxes, and more capabilities. Wix’s eCommerce features are more basic, which might be sufficient for small online stores but may not scale as well for larger eCommerce operations.
Pricing: As of 2021, both platforms offered several pricing tiers. Wix’s eCommerce plans start at $23/month, while Shopify’s start at $29/month. The right choice depends on your specific needs and budget.
SEO and Marketing Tools: Both platforms offer SEO tools to help your store rank in search engines, and they both provide marketing tools like email marketing and social media integration. Shopify’s app marketplace offers a broader range of additional marketing tools than Wix’s app market.
Support: Both platforms offer support via various channels, including phone, email, live chat, and help centers.